India Ranks First In Crypto Adoption Despite Regulatory Setbacks

India, despite immense regulatory challenges, has secured the top spot in Chainalysis’ 2023 Global Crypto Adoption Index. This marks a significant comeback from last year when India had dropped to the fourth spot in Chainalysis’ 2022 adoption index.

India ranks first in four of the five sub-categories considered for the 2023 index. These include centralised service value received, retail centralised service value received, DeFi value received, and retail DeFi value received.

Additionally, India has made a dramatic jump in the peer-to-peer (P2P) exchange trade volume, moving from 82nd place in 2022 to 5th spot this year. 

All the metrics were weighted against a country’s purchasing power parity (PPP) per capita to arrive at the rankings. Nigeria, Vietnam, the United States and Ukraine completed the top 5, while the top 10 included the likes of the Phillippines, Indonesia, Pakistan, Brazil and Thailand.

The Central & Southern Asia and Oceania (CSAO) region dominated the top of the index, with six of the top ten countries located there. While the global adoption score averaged around 0.3 in the third quarter of 2023, India’s adoption index score stood at 1, a far cry from the global trends.

The report also highlighted that low-income countries witnessed a sharp recovery in crypto adoption after the doldrums of late 2022, fueled by the FTX implosion.

However, India’s position at the top in terms of adoption still comes as a surprise, given the country’s crypto industry is struggling hard to survive. The government’s stance, coupled with a general disillusionment and an ongoing crypto winter, has meant that crypto trade is at an all-time low.

Specifically, the government’s strict taxation regime has worked as a huge deterrent for people looking to invest in crypto. From capital gains tax on crypto to TDS and more, regulation and taxation are slowly choking the industry out. It has also seen widespread retrenchments from crypto exchanges as they look to cut costs, extend their runways and survive longer.

India has also been batting for global crypto regulations on various forums, with the G20 Summit being the latest forum where the country addressed the need for international rules on crypto.

Interestingly, a separate report by Coincub pegged India as 26th in the world for crypto crimes, only including one fraud in 2022 worth $3 Mn. Earlier this week, the Enforcement Directorate busted a part-time job fraud funnelling money out of India via cryptocurrencies, seizing movable assets worth INR 6.47 Cr, including INR 71.3 Lakh in cryptocurrencies.

Pariah states such as North Korea, Russia, China, Seychelles, Vanuatu, and more dominated the crime list. Surprisingly, the US and the UK also ranked high in the crimes index, at second and fifth place, respectively. The two countries reported fraud worth more than $2.5 Bn in 2022.